Toyota logs 1st operating loss in 71 yrs, sees bigger loss in FY 09

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TOKYO, May 8 Kyodo -
Toyota Motor Corp. said Friday it logged its first group operating loss in 71
years in the business year that ended March 31 but the outlook is grimmer as it
anticipates an even bigger operating loss of 850 billion yen for fiscal 2009
due to a persistent global slump in auto sales.
For fiscal 2008, Japan's top automaker reported a consolidated operating loss
of 461.01 billion yen, the first operating loss since fiscal 1937 and greater
than its February forecast of a 450 billion yen loss.
The automaker booked a group net loss of 436.94 billion yen in the just-ended
fiscal year, a sharp reversal from a record-high profit of 1.72 trillion yen
logged a year earlier, while sales dropped 21.9 percent from a year earlier to
20.53 trillion yen.
Toyota, which overtook General Motors Corp. as the world's largest automaker in
2008, said it expects to remain in the red in fiscal 2009 for the second
consecutive year as the global economic crisis pummels demand for vehicles in
most of its key markets and as a stronger yen erodes its overseas profits.
Looking ahead, Toyota projected a group net loss of 550 billion yen on sales of
16.5 trillion yen, down 19.6 percent from fiscal 2008.
''While we see a market recovery in some countries like China and India, it
will take more time for the normalization of financial markets and economic
recovery in Europe and the United States to take place,'' President Katsuaki
Watanabe said at a press conference in Tokyo.
''We need to brace for these current tough business conditions to continue into
the foreseeable future,'' he said without specifying when the company will be
able to return to the black.
To combat the huge losses, Toyota said it plans to cut 460 billion yen in fixed
costs and 340 billion yen in variable costs while reducing capital spending by
36 percent from a year earlier to 830 billion yen.
It will be the first time in six years that Toyota's capital investment has
fallen below 1 trillion yen as it stems spending in Japan and in most overseas
markets, excluding other parts of Asia.
Toyota has already cut production levels and reduced its temporary workforce in
a rare move for an automaker that has enjoyed eight consecutive years of
increased operating profits and steady rises in global car sales through fiscal
2007.
''I feel great regret that we lacked sufficient thoroughness and speed in
resolving problems and challenges in the process (of our rapid growth),''
Watanabe said.
Watanabe, who will step down in June, said a new team led by Executive Vice
President Akio Toyoda, a member of the company's founding family, will bring
forward ''a new Toyota'' that can overcome the current tough business
conditions.
Toyota, which has Daihatsu Motor Co. and Hino Motors Ltd. under its wing, sold
7.57 million units in fiscal 2008, down 15.1 percent due to sales declines in
all markets.
Toyota's vehicle sales in Japan fell about 244,000 units from a year earlier to
1.94 million while sales in North America decreased about 746,000 units to 2.21
million. Even in other parts of Asia, sales were down by about 52,000 units to
904,892.
In fiscal 2009, the automaker plans to sell 6.5 million vehicles worldwide. Its
global production target in calendar 2009 stands at 6.68 million vehicles
compared to 9.24 million units produced in 2008.
In addition to a heavy drop in vehicle sales, the company also estimates that
the average exchange rate for fiscal 2009 will be 95 yen per U.S. dollar and
125 yen per euro, compared with 101 yen and 144 yen for fiscal 2008.
The automaker also said it will cut its annual dividend for fiscal 2008 to 100
yen per share, compared with 140 yen in fiscal 2007. It would mark the
company's first dividend cut since it changed the end of its business year to
March in fiscal 1994.
Toyota did not provide a dividend forecast for the current business year.
Last week, Japan's second-largest automaker Honda Motor Co. said it expects to
remain in the black with a group operating profit of 10 billion yen in fiscal
2009 amid booming sales of its low-priced Insight hybrid hatchback.
Competition between the two automakers for the top position in the green car
race is expected to intensify as Toyota introduces its third-generation Prius,
the world's top-selling hybrid, later this month.
Toyota said it will focus on compact and hybrid vehicles as Japanese automakers
pin their hopes on new government tax breaks on eco-friendly cars to stir
languishing demand in the auto market.
''I'm very happy to receive support from so many customers at a difficult
period like now,'' Watanabe said, referring to the Prius. ''I hope this will
become our savior.''
Before the release of the earnings results, Toyota's share price on the Tokyo
Stock Exchange closed at 3,980 yen, down nearly 1.5 percent.
==Kyodo